THE FEDERAL RESERVE DECIDED NOT TO DO ANYTHING AT ITS MEETING WEDNESDAY. WAS THAT THE RIGHT DECISION?

Last week’s question: Should Europe simply give up on debt-ridden Greece and let it leave the eurozone? Online poll: Yes 76% (13 votes), No 24% (4 votes). Panel: Yes 4, No 3 (James Hamilton was unable to participate last week.)

YES: Additional action by the Fed is not what the U.S. economy needs right now. Arguably, the Fed’s job was finished after QE1, which stabilized the financial system. Each successive round of quantitative easing, for example, produces diminishing returns, punishes savers and sends a message to Congress that they can borrow more money at very low rates, which would increase the deficit without substantially reducing unemployment and creating jobs. Far better to think of ways to restore some certainty to the marketplace, starting with the looming fiscal cliff set to automatically raise taxes and cut government expenditures at year’s end.

YES: After two rounds of quantitative easing and “Operation Twist” bond-buying by the Fed, hoped-for boosts in spending have not happened. Having long since pushed interest rates to near zero, another round of QE, effectively fabricating money to buy assets, is also questionable. Artificial stimulus may temporarily boost Wall Street, but is largely inconsequential for long-term real growth. Serious structural problems underlining the U.S. economy, caused by years of bad monetary policies, needs restructuring for genuine recovery and growth to be unleashed. The economy needs to be allowed to reconstitute.

YES: With interest rates at historic lows, there is not much more the Fed can do to stimulate the economy. This is the classic “pushing on a string” scenario. The Fed can lower interest rates hoping that people will borrow money to spend and invest, but it can’t make them do it. Businesses will only invest if they have customers, and it will take a boost in demand to get that. It might be better to let interest rates rise at this point. They would still be relatively low, but it would strengthen the dollar (which reduces inflation) and give savers more income to spend.

NO: The Fed has to balance two long-term targets in order to keep the economy growing at a healthy rate. The first is to keep inflation around 2 percent, and the second is to keep unemployment below 6 percent. With unemployment currently above 8 percent and PCE (personal consumption expenditures) inflation at 1.5 percent, both objectives suggest the Fed should be trying to do more to stimulate the economy. There are limits to how much we can expect the Fed to accomplish, but one thing they can and should do is make sure the United States does not repeat Japan’s mistake of cultivating chronic deflation.

YES: At this point, the FOMC can only purchase government securities — an act that would keep the cost of borrowing low in an effort to extend credit in the U.S. economy. But that is unfortunately not the problem. The problem is that economic growth is sluggish at record low costs of money. Companies have money. What they and their consumers don’t have is confidence in the economy. No infusion of money can create confidence at this point. However, the government could be of help through fiscal policy assuring no tax hikes, better budget management, and a more emphatic dialogue on adjusting entitlement programs.